The port town and commercial centre of Puntland, Bossasso, has been relatively peaceful. But it has seen a tenfold population explosion in the last few years to an estimated 300,000, driven by internally displaced persons as well as Ethiopian refugees. Early in 2008, a grenade attack on the latter killed scores, apparently a retaliation by the radical Islamist "al-Shabab" (youth) wing of the Council of Islamic Courts for alleged crimes of Ethiopian troops in Somalia supporting the TFG in the south.

Mike Povey, managing director of Range Resources, says his company and its backer Africa Oil Corp., have pledged millions of dollars to develop airports at Puntland capital Garowe and Bossasso. The country remains one of the least developed in the world, with very rudimentary transportation infrastructure.

The coastal waters off Somalia have earned a reputation as the most piratical in the world. The port of Eyl, about 500 kilometres south of Bossasso, 150 km east of the capital Garowe, has been proposed as a potential exporting port for oil. It was at this port that pirates held hostage a French yacht and its crew in April 2008.

Range Resources, Africa Oil and the Puntland government reckon the geology of Nogal Valley and Dharoor Valley blocks is similar (formerly contiguous) to blocks in Yemen, which currently produces just under 400,000 barrels a day and has proven reserves of between 3b and 4b barrels.

Graph: Africa Oil Corporation

Graph: Africa Oil Corporation

An aerial view of the site abandoned by Conoco at the outbreak of civil war in Somalia in the early 1990s, lying just east of Garowe. Conoco says it still has an interest in Somalia, but won't say if it would make any challenge to reclaim its rights.

Foreign aid workers and journalists in Puntland have been regularly kidnapped for ransom, with murder a threat wherever the Islamists operate. Any foreign oil workers require armed escorts; however, security forces have been implicated themselves in kidnapping plots.

Puntland President "Adde" Muse Hersi says oil will bring great benefits to both Puntland and greater Somalia. But he says "security" is the first priority and he vows to take back a town taken in late 2007 by rival breakaway Somaliland, which neighbours to the west.